EditorDespite almost being rejected by rank-and-file membership, the contract that was dubbed to be the “richest” contract the United Auto Workers negotiated with the Detroit automakers gives Ford Motor Company a surprising amount of flexibility in its staffing, according to BloombergBusiness.
Ford Motor Co. said its new four-year contract with the United Auto Workers will increase its U.S. labor costs by less than 1.5 percent annually by letting the company hire more low-cost workers and move production to factories in other countries.
“The agreement aligns our labor cost structure more closely with our competition and improves our manufacturing productivity and staffing flexibility,” Chief Executive Officer Mark Fields said in a statement Monday. Ford said it will have costs of $600 million this year related mainly to the deal’s ratification bonuses, in line with its annual forecast.
The contract allows Ford to hire an unlimited number of entry-level workers, who start at a lower wage than veterans, after a previous limit of 20 percent of its workforce as new hires. In addition, Ford said it will be able to use more temporary workers, who also are paid less. The agreement gives the automaker “the flexibility to leverage Ford’s global manufacturing footprint to improve cost competitiveness,” according to the statement.
In addition, Ford indicated that, although leaving Ford with the highest labor costs of the Detroit Three, the costs of the new UAW contract will be less than 1.5% per year to Ford.
“The voice of the majority has secured a strong future that will provide job security and economic stability for themselves and their families,” stated UAW President Dennis Williams at the time the UAW ratified the Ford agreement.
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